Busy Auction Day Adds $5.37bn to Debt Cost

With four auctions, Monday was a busy day for the Treasury. 

The 13-week auction brought in $148.8 billion in tender offers, of which $60.3 was accepted. The 2.47 T/A ratio was up marginally from last week's 2.43, and in line with the past six weeks. The median yield 0f 4.16 percent was a modest increase from last week's 4.11 percent. It was the fourth week in a row with a yield above four percent.

The 13-week auction replaced a batch of $60.1 billion in maturing bills. The annualized cost increased by $1.046 billion.

The 26-week auction sold $50.2 billion worth of debt, for which investors offered $141.6 billion in tender. The T/A came out to 2.82, up noticeably from the 2.64-2.69 of the past three weeks. Median yield landed at 4.49, up from 4.39 last week, and the 7th week in a row above 4 percent.

This auction replaced a batch of $47.4 billion. The annualized cost of this debt increased $1.53 billion.

At the 2-year note auction, the Treasury sold $46.6 billion worth of debt. The $115.6 billion tender made for a T/A of 2.48, generally in line with the T/A ratios of the seven months' auctions. The yield jumped slightly to 4.46 percent, marking November as the third consecutive month where the 2-year note pays more than four percent. 

With this auction, the Treasury replaced a batch of $63.8 billion worth of maturing notes. Despite the new batch being $17.2 billion smaller, the annualized cost for this maturity class increased by $1.754 billion.

In its last auction, the Treasury attracted $107.4 billion in tender offers for $47.7 billion in 5-year notes. The T/A of 2.25 was down from last week, but approximately in line with the past year's monthly auctions. 

This auction replaced a maturing batch of $35.8 billion, which came with a 2.03 percent median yield. The annualized cost increase resulting from today's auction and its 3.899 percent yield, is $1.044 billion. It is worth noting, though, that the yield on the 5-year note is now back below 4 percent, after having been at 4.13 percent at the September auction and 4.119 percent in October. 

The total, annualized increase in the cost of the U.S. debt is $5.374 billion. Despite this, the estimated average interest rate on U.S. debt remains at 2.06 percent, where it has been since November 14.

---

We do not give investment advice. 

This blog provides analytical information solely for the purposes of 1) predicting the cost of the federal debt, and 2) for assessing the risk for a U.S. fiscal crisis. All information published here, forecasting and other, is based on publicly available data from the U.S. Treasury, including but not limited to approximately 65 percent of the current debt; on macroeconomic data, including but not limited to monetary policy decisions by the Federal Reserve; and on macroeconomic theory.